Weak Global Demand and Fragile Recovery Pose Challenges for Singapore’s Economic Growth
Singapore’s economy is closely tied to its non-oil domestic exports (NODX) and factory output, both of which have shown signs of weakening in 2023 due to slow global demand. While there has been some improvement in September, with the decline in NODX and manufacturing output easing, economists remain cautious about the future.
NODX, which measures exports of goods made in Singapore, has been on a downward trajectory since September 2022, with September 2023 marking the 14th consecutive month of decline in electronics shipments, a key component of the country’s exports. Despite this, there were signs of recovery, particularly in electronics, which saw a smaller year-on-year drop compared to previous months. However, other sectors, such as pharmaceuticals and food preparations, continued to struggle, contributing to the overall negative performance.
Factory output, which constitutes over 20% of Singapore’s GDP, has also been under pressure. The manufacturing sector, particularly electronics, has been impacted by a global semiconductor market downturn, but there are expectations of recovery as demand for chips is projected to rise in the coming months. Despite this, economists foresee a fragile and gradual recovery, with NODX growth expected to remain negative for the rest of the year. However, some economists predict that manufacturing output could turn positive by year-end, particularly with China’s recovery and improving global trade conditions.
Overall, while Singapore’s economy faces challenges from declining exports and manufacturing output, the government remains optimistic about moderate growth in 2024, driven by a recovery in global demand and a potential turnaround in the electronics sector.
